Green Climate Fund approves US$271.3 million to CABEI for financing of the Electric Passenger Train Project in Costa Rica
The project will benefit 2.7 million people and is estimated to reduce CO2 emissions by 7.6 million tons over the life of the project.
Tegucigalpa, July 01, 2021.-The Green Climate Fund (GCF) approved the Central American Bank for Economic Integration (CABEI)'s proposal to finance the Costa Rica Electric Passenger Train Project for US$271.3 million, making it a historic approval given the size of the project and its high positive impact on mitigating the effects of climate change.
This initiative, which is expected to benefit 2.7 million people, is for a total of US$1.554 billion, of which CABEI approved US$550 million in financing and the GCF, through this approval, will provide US$250 million as a loan to the Government of Costa Rica and US$21.3 million as a donation. The remaining amount will be mobilized by the private sector through a concessionaire awarded the project through a bidding process.
The GCF loan proceeds have an annual interest rate of 0% and a term of up to 40 years and a grace period of up to 10 years.
"Costa Rica's GAM Electric Passenger Train represents a paradigm shift as it will be the reference in the region towards a low-emission sustainable transportation transition and will become the backbone that will integrate all types of public transportation. With this operation, CABEI makes history in its relationship with the GCF and catalyzes highly concessional resources to support a leading country in the region in achieving its economic decarbonization objectives by implementing this flagship project," highlighted CABEI Executive President Dr. Dante Mossi.
Claudia Dobles, First Lady of the Republic emphasized that "this approval of financing from the Green Climate Fund is a recognition of the country and that the Electric Passenger Train project is a solid, environmentally responsible project that will have a positive impact on the economy, the renovation of cities and the necessary transformation of the national mobility scheme. The benefits for the population will be manifested in several ways, mainly in a considerable improvement in the public transportation service, since this contribution from the GCF includes the donation of US$21 million to carry out Transit-Oriented Development (TOD) projects, for example, the implementation of bicycle lanes and the improvement of public space".
"The United Nations Green Climate Fund finances projects that have an impact on climate change, which is why, four years ago, we began a process of seeking funds for the Electric Train and we are pleased to tell you that, after careful scrutiny of our proposal, the Green Fund endorsed the project and approved being part of the CABEI loan to finance it with a contribution of US$250 million, for 40 years, with a 10-year grace period, at 0% interest. These conditions are unique in the market; it is the highest investment they would make in the region and sets Costa Rica as an example of sustainable railway development", mentioned the executive president of the Costa Rican Railway Institute (INCOFER), Elizabeth Briceño.
The project consists of a modern, accessible, safe and environmentally friendly electric train within the Greater Metropolitan Area (GAM) of Costa Rica with 85 kilometers of double track, passing through 15 cantons and contributing to the reduction of 7.6 million tons of CO2 during the train's useful life. In addition, this initiative is expected to generate 1,200 direct jobs during its construction phase and 1,470 during its operation phase.
CABEI has been a Direct Access Accredited Entity since 2016 before the Green Climate Fund (GCF), and enables CABEI to mobilize resources under favorable conditions for sustainable development in the region. The Costa Rica Electric Passenger Train Project is the third investment operation approved by the GCF for CABEI since its accreditation.